Company Quick10K Filing
Quick10K
Kemet
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$17.60 58 $1,020
10-Q 2019-06-30 Quarter: 2019-06-30
10-K 2019-03-31 Annual: 2019-03-31
10-Q 2018-12-31 Quarter: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-K 2018-03-31 Annual: 2018-03-31
10-Q 2017-12-31 Quarter: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-K 2017-03-31 Annual: 2017-03-31
10-Q 2016-12-31 Quarter: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-K 2016-03-31 Annual: 2016-03-31
10-Q 2015-12-31 Quarter: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-K 2015-03-31 Annual: 2015-03-31
10-Q 2014-12-31 Quarter: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-K 2014-03-31 Annual: 2014-03-31
10-Q 2013-12-31 Quarter: 2013-12-31
8-K 2019-08-01 Earnings, Regulation FD, Exhibits
8-K 2019-07-31 Shareholder Vote
8-K 2019-05-22 Regulation FD, Exhibits
8-K 2019-05-16 Earnings, Regulation FD, Exhibits
8-K 2019-03-20 Officers, Exhibits
8-K 2019-02-13 Other Events, Exhibits
8-K 2019-01-31 Earnings, Regulation FD, Exhibits
8-K 2019-01-14 Other Events, Exhibits
8-K 2018-12-20 Other Events, Exhibits
8-K 2018-12-19 Officers
8-K 2018-11-29 Officers, Exhibits
8-K 2018-11-26 Off-BS Arrangement, Exhibits
8-K 2018-11-07 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-11-07 Regulation FD, Exhibits
8-K 2018-10-30 Other Events, Exhibits
8-K 2018-10-30 Earnings, Regulation FD, Exhibits
8-K 2018-10-29 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-09-11 Regulation FD, Exhibits
8-K 2018-09-06 Regulation FD, Exhibits
8-K 2018-09-04 Off-BS Arrangement
8-K 2018-07-26 Regulation FD, Exhibits
8-K 2018-07-25 Earnings, Regulation FD, Exhibits
8-K 2018-07-25 Shareholder Vote
8-K 2018-05-30 Officers, Exhibits
8-K 2018-05-23 Regulation FD, Exhibits
8-K 2018-05-17 Earnings, Regulation FD, Exhibits
8-K 2018-04-18 Officers, Exhibits
8-K 2018-03-22 Other Events, Exhibits
8-K 2018-02-02 Regulation FD, Exhibits
8-K 2018-01-17 Regulation FD, Exhibits
LECO Lincoln Electric Holdings 5,270
SWCH Switch 2,750
AR Antero Resources 2,470
TCDA Tricida 1,740
MC Moelis 1,690
ITRM Iterum Therapeutics 105
MGYR Magyar Bancorp 68
DXYN Dixie Group 11
MYLI Music of Your Life 0
SPFI South Plains Financial 0
KEM 2019-06-30
Part I - Financial Information
Item 1 - Financial Statements
Note 1. Basis of Financial Statement Presentation
Note 2. Debt
Note 3. Goodwill and Intangible Assets
Note 4. Restructuring Charges
Note 5. Comprehensive Income (Loss) and Accumulated Other Comprehensive Income
Note 6. Changes in Stockholders' Equity
Note 7. Equity Method Investments
Note 8. Reportable Segment and Geographic Information
Note 9. Defined Benefit Pension and Other Postretirement Benefit Plans
Note 10. Stock-Based Compensation
Note 11. Income Taxes
Note 12. Basic and Diluted Net Income per Common Share
Note 13. Derivatives
Note 14. Leases
Note 15. Concentrations of Risks
Note 16. Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part Ii-Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 kem-fy200630xex311.htm
EX-31.2 kem-fy200630xex312.htm
EX-32.1 kem-fy200630xex321.htm
EX-32.2 kem-fy200630xex322.htm

Kemet Earnings 2019-06-30

KEM 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
false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div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Acquisitions</font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Sale of Electro-Mechanical Business and Acquisition of Remaining Interest in TOKIN</font><font style="font-family:inherit;font-size:10pt;"> </font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Between February 1, 2013 and April 19, 2017, KEMET, through its wholly-owned subsidiary, KEMET Electronics Corporation (&#8220;KEC&#8221;), held a </font><font style="font-family:inherit;font-size:10pt;">34%</font><font style="font-family:inherit;font-size:10pt;"> economic interest in TOKIN Corporation (&#8220;TOKIN&#8221;) pursuant to a Stock Purchase Agreement (the &#8220;Stock Purchase Agreement&#8221;) by and among KEC, TOKIN and NEC Corporation (&#8220;NEC&#8221;), as calculated based on the number of common shares held by KEC, directly and indirectly, in proportion to the aggregate number of common and preferred shares of TOKIN outstanding as of such date. TOKIN was established in Japan in 1938 and is engaged in production and distribution of tantalum capacitors, transmitting communication devices, magnetic devices, piezoelectric devices and sensors. TOKIN has </font><font style="font-family:inherit;font-size:10pt;">six</font><font style="font-family:inherit;font-size:10pt;"> manufacturing locations throughout Asia and was previously operating as a joint venture with NEC. </font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On April 14, 2017, TOKIN closed on the sale of its electro-mechanical devices (&#8220;EMD&#8221;) business to NTJ Holdings 1 Ltd. (&#8220;NTJ&#8221;), a special purpose entity that is owned by funds managed or operated by Japan Industrial Partners, Inc. (&#8220;JIP&#8221;), pursuant to a master sale and purchase agreement (the &#8220;EMD Master Sale and Purchase Agreement&#8221;) previously entered into between TOKIN, NTJ and JIP (&#8220;Sale of EMD&#8221;). The initial selling price for EMD was </font><font style="font-family:inherit;font-size:10pt;">JPY 48.2 billion</font><font style="font-family:inherit;font-size:10pt;">, or approximately </font><font style="font-family:inherit;font-size:10pt;">$431.0 million</font><font style="font-family:inherit;font-size:10pt;">, using the March 31, 2017 exchange rate of </font><font style="font-family:inherit;font-size:10pt;">111.823</font><font style="font-family:inherit;font-size:10pt;"> Japanese Yen (&#8220;JPY&#8221;) to 1.00 U.S. Dollar (&#8220;USD&#8221;), and was subject to certain working capital adjustments. In the third quarter of fiscal year 2018, the selling price was adjusted by </font><font style="font-family:inherit;font-size:10pt;">JPY 1.1 billion</font><font style="font-family:inherit;font-size:10pt;"> or approximately </font><font style="font-family:inherit;font-size:10pt;">$10.1 million</font><font style="font-family:inherit;font-size:10pt;"> (using the December 31, 2017 exchange rate of </font><font style="font-family:inherit;font-size:10pt;">112.574</font><font style="font-family:inherit;font-size:10pt;"> Japanese Yen to 1.00 U.S. Dollar) related to working capital and other adjustments in accordance with the EMD Master Sale and Purchase Agreement. At the closing of the Sale of EMD, TOKIN used a portion of the sale proceeds to repay debt related to a shareholder loan from NEC. The TOKIN historical balance sheet was adjusted to reflect the removal of net assets sold and other items directly impacted by the Sale of EMD. Additionally, due to KEMET&#8217;s </font><font style="font-family:inherit;font-size:10pt;">34%</font><font style="font-family:inherit;font-size:10pt;"> equity interest in TOKIN held as of the closing, adjustments were made to reflect KEMET&#8217;s accounting for the Sale of EMD in accordance with the equity method of accounting.</font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On April 19, 2017, pursuant to a stock purchase agreement (the &#8220;TOKIN Purchase Agreement&#8221;) dated February 23, 2017 between KEC and NEC, KEC completed its acquisition, subject to final purchase price adjustments, of the remaining </font><font style="font-family:inherit;font-size:10pt;">66%</font><font style="font-family:inherit;font-size:10pt;"> economic interest in TOKIN, and as a result, TOKIN became a </font><font style="font-family:inherit;font-size:10pt;">100%</font><font style="font-family:inherit;font-size:10pt;"> owned indirect subsidiary of KEMET (the &#8220;TOKIN Acquisition&#8221;). Under the terms of the TOKIN Purchase Agreement, KEC paid NEC </font><font style="font-family:inherit;font-size:10pt;">JPY 16.2 billion</font><font style="font-family:inherit;font-size:10pt;">, or approximately </font><font style="font-family:inherit;font-size:10pt;">$148.6 million</font><font style="font-family:inherit;font-size:10pt;"> (using the April 19, 2017 exchange rate of </font><font style="font-family:inherit;font-size:10pt;">109.007</font><font style="font-family:inherit;font-size:10pt;"> Japanese Yen to 1.00 U.S. Dollar), for all of the outstanding shares of TOKIN it did not already own. The preliminary purchase price was comprised of </font><font style="font-family:inherit;font-size:10pt;">JPY 6.0 billion</font><font style="font-family:inherit;font-size:10pt;">, or approximately </font><font style="font-family:inherit;font-size:10pt;">$55.0 million</font><font style="font-family:inherit;font-size:10pt;"> (using the April 19, 2017 exchange rate of </font><font style="font-family:inherit;font-size:10pt;">109.007</font><font style="font-family:inherit;font-size:10pt;"> Japanese Yen to 1.00 U.S. Dollar) plus </font><font style="font-family:inherit;font-size:10pt;">JPY 10.2 billion</font><font style="font-family:inherit;font-size:10pt;">, or approximately </font><font style="font-family:inherit;font-size:10pt;">$93.6 million</font><font style="font-family:inherit;font-size:10pt;">, which represented one-half of the estimated excess net cash proceeds (&#8220;Excess Cash&#8221;) from the Sale of EMD. The acquisition price was subject to working capital adjustments pursuant to the EMD Master Sale and Purchase Agreement. As a result of these working capital adjustments, the acquisition price was increased by </font><font style="font-family:inherit;font-size:10pt;">JPY 0.3 billion</font><font style="font-family:inherit;font-size:10pt;">, or approximately </font><font style="font-family:inherit;font-size:10pt;">$3.0 million</font><font style="font-family:inherit;font-size:10pt;"> (using the September 30, 2017 exchange rate of </font><font style="font-family:inherit;font-size:10pt;">112.502</font><font style="font-family:inherit;font-size:10pt;"> Japanese Yen to 1.00 U.S. Dollar) in the second quarter of fiscal year 2018. </font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company believes the acquisition of TOKIN expands KEMET&#8217;s geographic presence, combining KEMET&#8217;s presence in the western hemisphere and TOKIN&#8217;s excellent position in Asia to enhance customer reach and creates an entrance into Japan for KEMET. The Company believes TOKIN&#8217;s product portfolio is a strong complement to KEMET&#8217;s existing product portfolio. KEMET believes the combination creates a leader in the combined polymer and tantalum capacitors market. The acquisition also enhances KEMET&#8217;s product diversification with entry into Electro-Magnetic Compatible ("EMC") devices, as well as sensors and actuators. With the increased scale, the Company anticipates optimizing costs through competitive raw materials sourcing and maximizing operating efficiencies. Consistent with expectations, the acquisition has been accretive to earnings with improvement in Net income, Adjusted EBITDA and cash flows. TOKIN&#8217;s tantalum capacitor business is included within KEMET&#8217;s Solid Capacitor segment (&#8220;Solid Capacitors&#8221;) and the remainder of TOKIN&#8217;s business formed a new reportable segment for KEMET in fiscal year 2018, Electro-Magnetic, Sensors, and Actuators (&#8220;MSA&#8221;).</font></div></div> 0000887730 2019-04-01 2019-06-30 0000887730 2019-07-31 0000887730 2019-06-30 0000887730 2019-03-31 0000887730 2018-04-01 2018-06-30 0000887730 2018-06-30 0000887730 2018-03-31 0000887730 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0000887730 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0000887730 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0000887730 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0000887730 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019 
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to      
 
Commission File Number: 001-15491
KEMET CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
57-0923789
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
KEMET Tower, One East Broward Blvd., Fort Lauderdale, Florida 33301
(Address of principal executive offices, zip code)
 
(954) 766-2800
(Registrant’s telephone number, including area code)
 
Former name, former address and former fiscal year, if changed since last report: N/A

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of exchange on which registered
Common Stock, par value $0.01
KEM
New York Stock Exchange
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large Accelerated Filer
Accelerated Filer
Non-accelerated Filer 
Smaller Reporting Company
Emerging Growth Company
 
 
 
 
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of July 31, 2019 was 58,025,570.
 




KEMET CORPORATION AND SUBSIDIARIES
Form 10-Q for the Quarter ended June 30, 2019
 
INDEX
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 3.1
 
Exhibit 3.2
 
Exhibit 31.1
 
Exhibit 31.2
 
Exhibit 32.1
 
Exhibit 32.2
 
Exhibit 101
 
Exhibit 104
 





PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements

KEMET CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands, except per share data)
(Unaudited)
 
 
June 30, 2019
 
March 31, 2019
ASSETS
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
217,307

 
$
207,918

Accounts receivable, net
154,522

 
154,059

Inventories, net
256,140

 
241,129

Prepaid expenses and other current assets
48,187

 
38,947

Total current assets
676,156

 
642,053

Property, plant and equipment, net of accumulated depreciation of $889,142 and $880,451 as of June 30, 2019 and March 31, 2019, respectively
518,310

 
495,280

Goodwill
40,294

 
40,294

Intangible assets, net
53,448

 
53,749

Equity method investments
14,238

 
12,925

Deferred income taxes 
44,544

 
57,024

Other assets
44,216

 
16,770

Total assets
$
1,391,206

 
$
1,318,095

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 

 
 

Current liabilities:
 

 
 

Current portion of long-term debt
$
29,225

 
$
28,430

Accounts payable
161,853

 
153,287

Accrued expenses
79,173

 
93,761

Income taxes payable
808

 
2,995

Total current liabilities 
271,059

 
278,473

Long-term debt
282,871

 
266,041

Other non-current obligations
149,267

 
125,360

Deferred income taxes 
11,214

 
8,806

Total liabilities
714,411

 
678,680

Stockholders’ equity:
 

 
 

Preferred stock, par value $0.01, authorized 10,000 shares, none issued

 

Common stock, par value $0.01, authorized 175,000 shares, issued 58,018 and 57,822 shares at June 30, 2019 and March 31, 2019, respectively
580

 
578

Additional paid-in capital
466,704

 
465,366

Retained earnings
241,635

 
204,195

Accumulated other comprehensive income (loss)
(32,124
)
 
(30,724
)
Total stockholders’ equity
676,795

 
639,415

Total liabilities and stockholders’ equity
$
1,391,206

 
$
1,318,095



 See accompanying notes to the unaudited condensed consolidated financial statements.

3



KEMET CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Unaudited)
 
Three Months Ended June 30,
 
2019
 
2018
Net sales
$
345,242

 
$
327,616

Operating costs and expenses:
 

 
 

Cost of sales
223,614

 
232,795

Selling, general and administrative expenses
47,885

 
48,542

Research and development
12,175

 
10,688

Restructuring charges
2,208

 
(96
)
(Gain) loss on write down and disposal of long-lived assets
960

 
511

Total operating costs and expenses
286,842

 
292,440

Operating income
58,400

 
35,176

Non-operating (income) expense
 

 
 

Interest income
(809
)
 
(378
)
Interest expense
2,545

 
7,036

Other (income) expense, net 
(726
)
 
(11,371
)
Income before income taxes and equity income (loss) from equity method investments
57,390

 
39,889

Income tax expense (benefit)
16,800

 
4,600

Income before equity income (loss) from equity method investments
40,590

 
35,289

Equity income (loss) from equity method investments
(250
)
 
(69
)
Net income
$
40,340

 
$
35,220

 
 
 
 
Net income per basic share
$
0.69

 
$
0.61

Net income per diluted share
$
0.68

 
$
0.60

 
 
 
 
Dividends declared per share
$
0.05

 
$

 
 
 
 
Weighted-average shares outstanding:
 

 
 

Basic
58,350

 
57,339

Diluted
59,055

 
59,038


See accompanying notes to the unaudited condensed consolidated financial statements.

4



KEMET CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Amounts in thousands)
(Unaudited)
 
Three Months Ended June 30,
 
2019
 
2018
Net income
$
40,340

 
$
35,220

Other comprehensive income (loss), net of tax:
 


 
Foreign currency translation gains (losses)
3,179

 
(24,203
)
Defined benefit pension plans
164

 
39

Defined benefit post-retirement plan adjustments
(37
)
 
(39
)
Equity interest in investee's other comprehensive income (loss)

 
(11
)
Cash flow hedges
(5,998
)
 
(4,438
)
Excluded component of fair value hedges
1,292

 

Other comprehensive income (loss)
(1,400
)
 
(28,652
)
Total comprehensive income (loss)
$
38,940

 
$
6,568


 
See accompanying notes to the unaudited condensed consolidated financial statements.


5



KEMET CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)(Unaudited) 
 
Three Months Ended June 30,
Operating activities:
2019
 
2018
Net income
$
40,340

 
$
35,220

Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of effect of acquisitions:
 

 
 

Depreciation and amortization
14,259

 
13,097

Equity (income) loss from equity method investments
250

 
69

Non-cash debt and financing costs
894

 
229

Stock-based compensation expense
2,725

 
4,060

Rent receivable

 
3,077

(Gain) loss on write down and disposal of long-lived assets
960

 
511

Pension and other post-retirement benefits
1,341

 
1,274

Change in deferred income taxes
14,895

 
951

Change in operating assets
(15,626
)
 
(24,520
)
Change in operating liabilities
(26,268
)
 
(49,330
)
Other
(57
)
 
(488
)
Net cash provided by (used in) operating activities
33,713

 
(15,850
)
Investing activities:
 

 
 

Capital expenditures
(37,112
)
 
(16,021
)
Proceeds from dividend 
433

 
772

Contributions to equity method investments
(2,000
)
 

Net cash provided by (used in) investing activities
(38,679
)
 
(15,249
)
Financing activities:
 

 
 

Payments of long-term debt

 
(4,313
)
Proceeds from long term debt
12,541

 

Proceeds from termination of derivative instruments
6,476

 

Principal payments on finance leases
(367
)
 

Proceeds from exercise of stock options
30

 
275

Payment of dividends
(2,900
)
 

Net cash provided by (used in) financing activities
15,780

 
(4,038
)
Net increase (decrease) in cash, cash equivalents and restricted cash
10,814

 
(35,137
)
Effect of foreign currency fluctuations on cash, cash equivalents and restricted cash
1,150

 
(7,061
)
Cash, cash equivalents, and restricted cash, at beginning of fiscal period
207,918

 
286,846

Cash, cash equivalents, and restricted cash, at end of fiscal period
219,882

 
244,648

Less: Restricted cash at end of period
2,575

 

Cash and cash equivalents at end of period
$
217,307

 
$
244,648



See accompanying notes to the unaudited condensed consolidated financial statements.

6



Notes to Condensed Consolidated Financial Statements
(Unaudited)
 
Note 1. Basis of Financial Statement Presentation
The Condensed Consolidated Financial Statements contained herein are unaudited and have been prepared from the books and records of KEMET Corporation and its subsidiaries (“KEMET” or the “Company”). In the opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments, consisting only of normal recurring adjustments unless otherwise disclosed, necessary for a fair presentation of the results for the interim periods. The Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q, and therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles (“GAAP”). Although the Company believes the disclosures are adequate to make the information presented not misleading, it is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the audited financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended March 31, 2019 (the “Company’s 2019 Annual Report”).
The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. In consolidation, all intercompany amounts and transactions have been eliminated. Net sales and operating results for the three months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full year.
The Company’s significant accounting policies are presented in the Company’s 2019 Annual Report. Refer to the “Change in Accounting Policies” section below for changes in accounting policies since the issuance of the Company's 2019 Annual Report.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions, and judgments based on historical data and other assumptions that management believes are reasonable. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. In addition, they affect the reported amounts of revenues and expenses during the reporting period.
The Company’s judgments are based on management’s assessment as to the effect certain estimates, assumptions, or future trends or events may have on the financial condition and results of operations reported in the unaudited condensed consolidated financial statements. It is important that readers of these unaudited financial statements understand that actual results could differ from these estimates, assumptions, and judgments.
Change in Accounting Policies
Effective April 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) 842, Leases (“ASC 842”) and Accounting Standards Update (“ASU”) No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing (Hosting) Arrangement that is a Service Contract (“ASU 2018-15”). As a result, the Company changed its accounting policy for leases and for implementation costs related to hosting arrangements. Except as discussed below, there have not been any other changes to the Company's significant accounting policies since the issuance of the Company's 2019 Annual Report.
Leases
ASC 842 requires the recognition of right-of-use (“ROU”) assets and lease liabilities for operating leases on the Condensed Consolidated Balance Sheets. The Company adopted ASC 842 using a modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to not reassess whether arrangements contained leases, not reassess lease classifications, and not reassess initial direct costs. The adoption of ASC 842 did not impact beginning retained earnings, or the prior year Condensed Consolidated Statements of Operations and Cash Flows.
Under ASC 842, the Company determines if an arrangement contains a lease at inception based on whether or not the Company has the right to control the asset during the contract period and other facts and circumstances. The Company has elected to not allocate the contract consideration for operating lease contracts with lease and non-lease components, and account for the lease and non-lease components as a single lease component. Operating lease ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make

7



lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease ROU asset also includes any lease prepayments, net of lease incentives.
Leases with a lease term of 12 months or less at inception are not recorded on the Condensed Consolidated Balance Sheets and are expensed on a straight-line basis over the lease term in the Condensed Consolidated Statements of Operations. The lease term is determined by assuming the exercise of renewal options that are reasonably certain. As most of the Company's leases do not provide an implicit interest rate, the Company uses its local incremental borrowing rate at the lease commencement date to determine the present value of lease payments. 
ROU assets and the short-term and long-term lease liabilities from operating leases are included in “Other assets,” “Accrued expenses,” and “Other non-current obligations,” respectively, in the Condensed Consolidated Balance Sheet. The Company's accounting for finance leases (formerly referred to as capital leases prior to the adoption of ASC 842) remains substantially unchanged. Finance leases are not material to the Company's Condensed Consolidated Financial Statements. Refer to Note 14, Leases, for additional information regarding the Company's leases and related transition adjustments.
Capitalized Software and Cloud-computing Arrangements
In August 2018, the FASB issued ASU No. 2018-15. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The Company early adopted the amendment in the first quarter of fiscal year 2020 and is applying the ASU prospectively to implementation costs incurred after April 1, 2019. 
As of June 30, 2019, the Company had $2.2 million of capitalized implementation costs related to cloud-computing arrangements, net of amortization. These capitalized implementation costs are amortized on a straight-line basis over the expected terms of the hosting arrangements and are amortized in the same line item in the Consolidated Statements of Operations as the expense for fees for the associated hosting arrangements.
Significant Accounting Policies
Revenue Recognition
The Company recognizes revenue under the guidance provided in ASC 606, Revenue from Contracts with Customers (“ASC 606”). Consistent with the terms of ASC 606, the Company records revenue on product sales in the period in which the Company satisfies its performance obligation by transferring control over a product to a customer. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for transferring products to a customer. The Company has elected the practical expedient under ASC 606-10-32-18 and does not consider the effects of a financing component on the promised amount of consideration because the period between when the Company transfers a product to a customer and when the customer pays for that product is one year or less. As performance obligations are expected to be fulfilled in one year or less, the Company has elected the practical expedient under ASC 606-10-50-14 and has not disclosed information relating to remaining performance obligations.
The Company sells its products to distributors, original equipment manufacturers (“OEM”), and electronic manufacturing services providers (“EMS”), and the sales price may include adjustments for sales discounts, price adjustments, and sales allowances. The Company has elected the practical expedient under ASC 606-10-10-4 and evaluates these sales-related adjustments on a portfolio basis. The principle forms of these adjustments include:
Inventory price protection and ship-from stock and debit (“SFSD”) programs,
Distributor rights of returns,
Sales allowances, and
Limited assurance warranties
The Company's inventory price protection and SFSD programs provide authorized distributors with the flexibility to meet marketplace prices by allowing them, upon a pre-approved case-by-case basis, to adjust their purchased inventory cost to correspond with current market demand. Requests for SFSD adjustments are considered on an individual basis, require a pre-approved cost adjustment quote from their local KEMET sales representative, and apply only to a specific customer, part, specified special price amount, specified quantity, and are only valid for a specific period of time. To estimate potential SFSD adjustments corresponding with current period sales, KEMET records a sales reserve based on historical SFSD credits, distributor inventory levels, and certain accounting assumptions, all of which are reviewed quarterly.
Select distributors have the right to return a certain portion of their purchased inventory to KEMET from the previous fiscal quarter. The Company estimates future returns based on historical return patterns and records a corresponding right of

8



return asset and refund liability as a component of the line items, “Inventories, net” and “Accrued expenses,” respectively, on the Condensed Consolidated Balance Sheets. The Company also offers volume based rebates on a case-by-case basis to certain customers in each of the Company’s sales channels.
The Company's sales allowances are recognized as a reduction in the line item “Net sales” on the Condensed Consolidated Statements of Operations, while the associated reserves are included in the line item “Accounts receivable, net” on the Condensed Consolidated Balance Sheets. Estimates used in determining sales allowances are subject to various factors. This includes, but is not limited to, changes in economic conditions, pricing changes, product demand, inventory levels in the supply chain, the effects of technological change, and other variables that might result in changes to the Company’s estimates.
The Company provides a limited assurance warranty on products that meet certain specifications to select customers. The warranty coverage period is generally limited to one year for United States based customers and a length of time commensurate with regulatory requirements or industry practice outside the United States. A warranty cannot be purchased by the customer separately and, as a result, product warranties are not considered to be separate performance obligations. The Company’s liability under these warranties is generally limited to a replacement of the product or refund of the purchase price of the product. Warranty costs were not material for the three months ended June 30, 2019 and 2018.
Shipping and handling costs are included in cost of sales.
Disaggregation of Revenue
Refer to Note 8, “Segment and Geographic Information” for revenue disaggregated by primary geographical market, sales channel, and major product line.
Contract liabilities
Contract liabilities consist of advance payments from certain customers within the OEM channel for the development of additional production capacity. The current and noncurrent portions of these liabilities are included as a component of the line items, “Accrued expenses” and “Other non-current obligations,” respectively, on the Condensed Consolidated Balance Sheets.
The balance of net contract liabilities consisted of the following at June 30, 2019 and March 31, 2019 (amounts in thousands):
Contract Liabilities
Classification in Balance Sheet
June 30, 2019
 
March 31, 2019
Current
Accrued expenses
$
256

 
$
256

Non-current
Other non-current obligations

 

 
 
$
256

 
$
256


In the three months ended June 30, 2019, the Company did not recognize any revenue related to contract liabilities at March 31, 2019. In the three months ended June 30, 2018, the Company recognized revenue of $0.1 million related to contract liabilities at March 31, 2018. Revenue related to contract liabilities is recorded on the Condensed Consolidated Statements of Operations in the line item, "Net sales."
Contract assets
The Company recognizes an asset from the costs incurred to fulfill a contract if those costs directly relate to an existing or anticipated contract or specific business opportunity, if the costs enhance resources that will be used in satisfying performance obligations in the future, and the costs are expected to be recovered through subsequent sale of product to the customer. The Company has determined that certain direct labor, materials, and allocations of overhead incurred within research and development activities meet the requirements to be capitalized. As most of the Company's contracts and customer specific business opportunities do not include a stated term, the Company amortizes these capitalized costs over the expected product life cycle, which is consistent with the estimated transfer of goods to the customer. Capitalized contract costs were $1.5 million and $1.6 million at June 30, 2019 and March 31, 2019, respectively. Capitalized contracts costs are recorded on the Condensed Consolidated Balance Sheets in the line item, “Other assets.” Amortization expense related to the contract costs was $0.2 million and $0.2 million for the three months ended June 30, 2019 and 2018, respectively. There was no impairment loss in relation to the costs capitalized for the three months ended June 30, 2019 and 2018. Amortization expense related to contract assets is recorded on the Condensed Consolidated Statements of Operations in the line item "Cost of sales."

9



Fair Value Measurement
The Company utilizes three levels of inputs to measure the fair value of (a) nonfinancial assets and liabilities that are recognized or disclosed at fair value in the Company’s Condensed Consolidated Financial Statements on a recurring basis (at least annually) and (b) all financial assets and liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
The first two levels of inputs are considered observable and the last is considered unobservable. The levels of inputs are as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 and March 31, 2019 are as follows (amounts in thousands):
 
Carrying Value June 30,
 
Fair Value June 30,
 
Fair Value Measurement Using
 
Carrying Value March 31,
 
Fair Value March 31,
 
Fair Value Measurement Using
 
2019
 
2019
 
Level 1
 
Level 2 (3)
 
Level 3
 
2019
 
2019
 
Level 1
 
Level 2 (3)
 
Level 3
Assets (Liabilities):
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Money markets (1)(2)
$
62,846

 
$
62,846

 
$
62,846

 
$

 
$

 
$
60,687

 
$
60,687

 
$
60,687

 
$

 
$

Derivative assets
706

 
706

 

 
706

 

 
5,141

 
5,141

 
 
 
5,141

 
 
Derivative liabilities
(3,145
)
 
(3,145
)
 

 
(3,145
)
 

 

 

 

 

 

Total debt
(312,096
)
 
(322,700
)
 

 
(322,700
)
 

 
(294,471
)
 
(303,170
)
 

 
(303,170
)
 

___________________
(1) Included in the line item “Cash and cash equivalents” on the Condensed Consolidated Balance Sheets.
(2) Certificates of Deposit of $34.1 million and $32.2 million that mature in three months or less are included within the balance as of June 30, 2019 and March 31, 2019, respectively.
(3) Derivative assets and liabilities fair value was determined by using a third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data. Where applicable, these models discount future cash flow amounts using market-based observable inputs, including interest rate yield curves, and forward and spot prices for currencies. For total debt, the valuation approach used to calculate fair value was a discounted cash flow based on the current market rate.
Deferred Income Taxes
The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The Company periodically evaluates its net deferred tax assets based on an assessment of historical performance, ability to forecast future events, and the likelihood that the Company will realize the benefits through future taxable income. Valuation allowances are recorded to reduce the net deferred tax assets to the amount that is more likely than not to be realized. For interim reporting purposes, the Company records income taxes based on the expected annual effective income tax rate, taking into consideration global forecasted tax results and the effect of discrete tax events. The Company makes certain estimates and judgments in the calculation for the provision for income taxes, in the resulting tax liabilities, and in the recoverability of deferred tax assets. All deferred tax assets are reported as noncurrent in the Condensed Consolidated Balance Sheets.

10



Inventories
Inventories are stated at the lower of cost or net realizable value. The components of inventories are as follows (amounts in thousands):
 
June 30, 2019
 
March 31, 2019
Raw materials and supplies
$
104,160

 
$
97,119

Work in process
83,856

 
71,374

Finished goods
86,766

 
88,175

Subtotal
274,782

 
256,668

Inventory reserves
(18,642
)
 
(15,539
)
Inventories, net
$
256,140

 
$
241,129

 
Recently Issued Accounting Pronouncements
There are currently no accounting standards that have been issued that will have a significant impact on the Company’s financial position, results of operations or cash flows upon adoption.
Note 2. Debt
A summary of debt is as follows (amounts in thousands):
 
June 30,
2019
 
March 31,
2019
TOKIN Term Loan Facility (1)
284,623

 
276,808

Customer Advances (2)
20,906

 
11,270

Other (3)
6,567

 
6,393

Total debt
312,096

 
294,471

Current maturities
(29,225
)
 
(28,430
)
Total long-term debt
$
282,871

 
$
266,041

_________________
(1) Amount shown is net of discount, bank issuance costs, and other indirect issuance costs of $8.9 million and $8.7 million at June 30, 2019 and March 31, 2019, respectively.
(2) Amount shown is net of discount of $5.0 million and $2.1 million at June 30, 2019, and March 31, 2019, respectively.
(3) Amounts are shown net of discounts of $0.6 million at June 30, 2019 and March 31, 2019, respectively.
The line item “Interest expense” on the Condensed Consolidated Statements of Operations for the three months ended June 30, 2019 and 2018, consists of the following (amounts in thousands):
 
Three Months Ended June 30,
 
2019
 
2018
Contractual interest expense
$
1,740

 
$
6,845

Capitalized interest
(105
)
 
(64
)
Amortization of debt issuance costs
127

 
116

Amortization of debt (premium) discount
767

 
98

Imputed interest on acquisition-related obligations

 
15

Interest expense on finance leases
16

 
26

Total interest expense
$
2,545

 
$
7,036


TOKIN Term Loan Facility
On October 29, 2018, the Company entered into a JPY 33.0 billion Term Loan Agreement (the “TOKIN Term Loan Facility”) by and among TOKIN Corporation (“TOKIN”), the lenders party thereto (the “Lenders”) and Sumitomo Mitsui Trust Bank, Limited in its capacity as agent (the “Agent”), arranger and Lender. Funding for the TOKIN Term Loan Facility occurred on November 7, 2018. The proceeds, which were net of an arrangement fee withheld from the funding amount, were JPY 32.1 billion, or approximately $283.9 million using the exchange rate as of November 7, 2018. Net of the arrangement fee, bank issuance costs, and other indirect issuance costs, the Company's net proceeds from the TOKIN Term Loan Facility was $281.8 million.

11



The proceeds from the TOKIN Term Loan Facility were used by TOKIN to make intercompany loans (the “Intercompany Loans”) to the Company. The proceeds of the Intercompany Loans, along with other cash on hand, were used by the Company to prepay in full the outstanding amounts under the Company's previous term loan of $323.4 million and a prepayment premium of 1.0%, or $3.2 million.
The TOKIN Term Loan Facility consists of (i) a JPY 16.5 billion (approximately $146.0 million using the exchange rate as of November 7, 2018) Term Loan A tranche (the “Term Loan A”) and (ii) a JPY 16.5 billion (approximately $146.0 million using the exchange rate as of November 7, 2018) Term Loan B tranche (the “Term Loan B” and, together with the Term Loan A, collectively, the “Term Loans”). Principal payments under Term Loan A are required semi-annually, in the amount of JPY 1.4 billion (approximately $12.8 million using the exchange rate as of June 30, 2019), while the principal of Term Loan B is due in one payment at maturity. At each reporting period, the carrying value of the loan is translated from Japanese Yen to U.S. Dollars using the spot exchange rate as of the end of the reporting period.
Interest payments are due semi-annually on the Term Loans, with the interest rate based on a margin over the six-month Japanese TIBOR. The applicable margin for Term Loan A is 2.00% and for Term Loan B is 2.25%. Japanese TIBOR at June 30, 2019 was 0.13%. Interest payable related to the TOKIN Term Loan Facility included in the line item “Accrued expenses” on the Condensed Consolidated Balance Sheets was $1.7 million as of June 30, 2019.
The Term Loans mature on September 30, 2024. KEMET and certain subsidiaries of TOKIN provided guarantees of the obligations under the Term Loans, which also are secured by certain assets, properties and equity interests of TOKIN and its material subsidiaries. The Term Loans contain customary covenants applicable to both the Company and to TOKIN, including maintenance of a consolidated leverage ratio, the absence of two consecutive years of consolidated operating losses and the maintenance of certain required levels of consolidated net assets. The TOKIN Term Loan Facility agreement also contains customary events of default. The Company may prepay the Term Loans at any time, subject to certain notice requirements and reimbursement of loan breakage costs.
Revolving Line of Credit
In connection with the closing of the TOKIN Term Loan Facility on October 29, 2018, the Company entered into Amendment No. 10 to the Loan and Security Agreement, Waiver and Consent (the “Revolver Amendment”), by and among KEMET, KEMET Electronics Corporation (“KEC”), the other borrowers named therein, the financial institutions party thereto as lenders and Bank of America, N.A., a national banking association, as agent for the lenders. The Revolver Amendment provides the Company with, among other things, increased flexibility for certain restricted payments (including dividends), and also released certain pledges that allowed the Company to obtain the TOKIN Term Loan Facility in order to pay in full the Company's prior term loan. The revolving line of credit has a facility amount of up to $75.0 million, which is based on factors including outstanding eligible accounts receivable, inventory, and equipment collateral. There were no borrowings under the revolving line of credit during the quarter ended June 30, 2019, and the Company’s available borrowing capacity under the Loan and Security Agreement was$62.5 million as of June 30, 2019.
Customer Advances
In September, November, and February of fiscal year 2019, the Company entered into three agreements with different customers (the “Customers”) pursuant to which the Customers agreed to make advances (collectively, the “Advances”) to the Company in an aggregate amount of up to $72.0 million (collectively, the “Customer Capacity Agreements”). The Company is using these Advances to fund the purchase of production equipment and to make other investments and improvements in its business and operations (the “Investments”) to increase overall capacity to produce various electronic components of the type and part as may be sold by the Company to the Customers from time to time. The Company retains all rights to the production equipment purchased with the funds from the Advances. The Advances from the Customers are being made in quarterly installments (“Installments”) over an expected period of 18 to 24 months from the effective date of the Customer Capacity Agreements.
The Advances will be repaid beginning on the date that production from the Investments is sufficient to meet the Company's obligations under the agreements with the Customers. Repayments will be made on a quarterly basis as determined by calculations that generally consider the number of components purchased by the Customers during the quarter. Repayments based on the calculations will continue until either the Advances are repaid in full, or December 31, 2038 for all three Customers. The Company has a quarterly repayment cap in the agreement with each of the Customers and is not required to make any quarterly repayments to the Customers that in the aggregate exceeds $1.8 million. If the Customers do not purchase a number of components that would require full repayment of the Advances by December 31, 2038, then the Advances shall be deemed repaid in full. Additionally, if the Customers do not purchase a number of components that would require a payment on the Advances for a period of 16 consecutive quarters, the Advances shall be deemed repaid in full.
As of June 30, 2019, the Company has received a total of $26.0 million in Advances from these Customers. Since the debt is non-interest bearing, the Company has recorded debt discounts on the Advances. These discounts will be amortized

12



over the expected life of the Advances through interest expense. During the three months ended June 30, 2019, the Company had $7.7 million in capital expenditures related to the Customer Capacity Agreements.
As of June 30, 2019, the Company had $2.6 million in cash that was restricted to be used to fund these Investments. Restricted cash is recorded within “Prepaid expenses and other current assets” in the Condensed Consolidated Balance Sheets.
Other Debt
In January 2017, KEMET Electronics Portugal, S.A. (“KEP”), a wholly owned subsidiary, entered into a program with the Portuguese government where KEP is eligible to receive interest free loans if purchases of fixed assets meet certain approved terms within the program. In January 2017, KEP received the first part of an interest free loan in the amount of EUR 2.2 million (or $2.5 million). In July 2017, KEP received the second part of the loan in the amount of EUR 0.3 million (or $0.3 million). The loan has a maturity date of February 1, 2025. The loan will be repaid through semi-annual payments on August 1 and February 1 of each year beginning on August 1, 2019. The repayments will be in the amount of EUR 0.2 million (or $0.2 million).
    In February 2019, KEP received a second interest free loan from the Portuguese government in the amount of EUR 0.9 million, (or $1.1 million). The loan has a maturity date of September 1, 2026 and will be repaid through semi-annual payments on March 1 and September 1 of each year beginning on March 1, 2021. The repayments will be in the amount of EUR 0.1 million (or $0.1 million).
Since the KEP debt is non-interest bearing, the Company has recorded debt discounts on these loans. These discounts are being amortized over the life of the loans through interest expense. If certain conditions are met by KEP, such as increased headcount at its facility in Evora, Portugal, increased revenue, and increased gross value added, a portion of these loans could be forgiven.
TOKIN has a short term borrowing pursuant to an agreement with The 77 Bank Limited, located in Japan, in the amount of 350.0 million Yen (or $3.2 million), at an interest rate of 0.53% (Japanese TIBOR plus 40 basis points). The loan was originally due in September 2018 and was extended to September 2019. The loan agreement automatically renews for successive one year periods if both parties choose not to terminate or modify it.
Note 3. Goodwill and Intangible Assets
The following table highlights the Company’s intangible assets (amounts in thousands):
 
 
June 30, 2019
 
March 31, 2019
 
 
Carrying
Amount
 
Accumulated
Amortization
 
Net Amount
 
Carrying
Amount
 
Accumulated
Amortization
 
Net Amount
Indefinite Lived Intangible Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Trademarks
 
$
15,375

 
$

 
$
15,375

 
$
15,151

 
$

 
$
15,151

Amortizing Intangibles:
 
 
 
 
 

 
 
 
 
 
 
Patents (10 - 18 years)
 
26,662

 
(12,401
)
 
14,261

 
26,662

 
(12,046
)
 
14,616

Customer relationships (10 - 21 years)
 
38,714

 
(14,902
)
 
23,812

 
37,850

 
(13,868
)
 
23,982

Other
 
215

 
(215
)
 

 
214

 
(214
)
 

Total amortizing intangibles
 
65,591

 
(27,518
)
 
38,073

 
64,726

 
(26,128
)
 
38,598

Total intangible assets
 
$
80,966

 
$
(27,518
)
 
$
53,448

 
$
79,877

 
$
(26,128
)
 
$
53,749


For each of the three months ended June 30, 2019 and 2018, amortization related to intangibles was $1.1 million, consisting of amortization related to patents of $0.3 million and amortization related to customer relationships of $0.8 million.
The weighted-average useful life for patents was 15.8 years as of June 30, 2019 and March 31, 2019, respectively, and 12.3 years for customer relationships as of June 30, 2019 and March 31, 2019, respectively. Estimated amortization of intangible assets for each of the next five fiscal years is $4.5 million, and thereafter, amortization will total $15.7 million. Estimated amortization of patents for each of the next five fiscal years is $1.4 million, and thereafter, amortization will total $7.2 million. Estimated amortization of customer relationships for each of the next five fiscal years is $3.1 million, and thereafter, amortization will total $8.5 million.
There were no changes to the carrying amount of goodwill during the three months ended June 30, 2019. The Company’s goodwill balance was $40.3 million at June 30, 2019 and March 31, 2019.

13



Note 4. Restructuring Charges
The Company has implemented restructuring plans, which include programs to increase competitiveness by removing excess capacity, relocating production to lower cost locations, and eliminating unnecessary costs throughout the Company. Significant restructuring plans in progress or recently completed as of June 30, 2019 are summarized below (amounts in thousands):
 
 
Total expected to be incurred
 
Incurred during quarter ended June 30, 2019
 
Cumulative incurred to date
Restructuring Plan
Segment
Personnel Reduction Costs
Relocation & Exit Costs
 
Personnel Reduction Costs
Relocation & Exit Costs
 
Personnel Reduction Costs
Relocation & Exit Costs
Tantalum powder facility relocation (1)
Solid Capacitors
897

2,098

 
448

(552
)
 
448

2,805

Axial electrolytic production relocation from Granna to Evora
Film and Electrolytic
673

3,964

 
673

1,308

 
673

3,603

Reorganization of MnO2 product line
Solid Capacitors
3,128


 
43


 
1,628


 __________________
(1) The current quarter credit for manufacturing relocation and exit costs is due to the recovery of costs related to the sale of tantalum that has been reclaimed (“tantalum reclaim”) as part of the plant exit activities. Tantalum reclaim in future periods is expected to further reduce the cumulative incurred costs.
A summary of the expenses aggregated in the Condensed Consolidated Statements of Operations line item “Restructuring charges” in the three months ended June 30, 2019 and 2018, is as follows (amounts in thousands):
 
Three Months Ended June 30,
 
2019
 
2018
Personnel reduction costs
$
1,229

 
$
(84
)
Relocation and exit costs
979

 
(12
)
Restructuring charges
$
2,208

 
$
(96
)

Three Months Ended June 30, 2019
The Company incurred $2.2 million in restructuring charges in the three months ended June 30, 2019 comprised of $1.2 million in personnel reduction costs and $1.0 million in manufacturing relocation and exit costs.
The personnel reduction costs of $1.2 million were primarily due to $0.7 million in costs in the Film and Electrolytic segment related to severance charges resulting from the closing of the Granna, Sweden manufacturing plant as axial electrolytic production is being moved to the plant in Evora, Portugal and $0.5 million in costs in the Solid Capacitors segment related to severance charges resulting from the closing of the tantalum powder facility in Carson City, Nevada as tantalum powder production is moving to the plant in Matamoros, Mexico.
The manufacturing relocation and exit costs of $1.0 million primarily related to $1.3 million in costs resulting from the relocation of axial electrolytic production equipment from the Company's plant in Granna, Sweden to its plant in Evora, Portugal. Manufacturing relocation and exit costs were benefited by a $0.6 million credit from tantalum reclaim.

14



Reconciliation of Restructuring Liability
A reconciliation of the beginning and ending liability balances for restructuring charges included in the line items “Accrued expenses” and “Other non-current obligations” on the Condensed Consolidated Balance Sheets for the three months ended June 30, 2019 and 2018 is as follows (amounts in thousands):
 
Three Months Ended June 30, 2019
 
Three Months Ended June 30, 2018
 
Personnel 
Reductions
 
Manufacturing 
Relocations
 
Personnel
 Reductions
 
Manufacturing 
Relocations
Beginning of period
$
1,865

 
$
316

 
$
9,629

 
$
330

Costs charged to expense
1,229

 
979

 
(84
)
 
(12
)
Costs paid or settled
(1,315
)
 
(979
)
 
(5,131
)
 
12

Change in foreign exchange
10

 
9

 
(244
)
 
(13
)
End of period
$
1,789

 
$
325

 
$
4,170

 
$
317

 
 
 
 
 
 
 
 

Note 5. Comprehensive Income (Loss) and Accumulated Other Comprehensive Income
Changes in AOCI for the three months ended June 30, 2019 and 2018 include the following components (amounts in thousands):
 
Foreign 
Currency
Translation, net of Tax (1)
 
Post-Retirement 
Benefit Plan Adjustments, net of Tax
 
Defined 
Benefit
Pension
 Plans, 
net of Tax (2)
 
Ownership Share of
Equity Method 
Investees’ Other 
Comprehensive 
Income (Loss), net of Tax
 
Cash Flow Hedges, net of Tax
 
Excluded Component of Fair Value Hedges, net of Tax
 
Net Accumulated 
Other 
Comprehensive 
Income (Loss), net of Tax
Balance at March 31, 2019
$
(14,350
)
 
$
793

 
$
(15,758
)
 
$
274

 
$
566

 
$
(2,249
)
 
$
(30,724
)
Other comprehensive income (loss) before reclassifications (3) (4)
5,834

 

 

 

 
(1,704
)
 
(346
)
 
3,784

Amounts reclassified out of AOCI
(2,655
)
 
(37
)
 
164

 

 
(4,294
)
 
1,638

 
(5,184
)
Other comprehensive income (loss)
3,179

 
(37
)
 
164

 

 
(5,998
)
 
1,292

 
(1,400
)
Balance at June 30, 2019
$
(11,171
)
 
$
756

 
$
(15,594
)
 
$
274

 
$
(5,432
)
 
$
(957
)
 
$
(32,124
)
 
Foreign 
Currency
Translation, net of Tax (1)
 
Post-Retirement 
Benefit Plan Adjustments, net of Tax
 
Defined 
Benefit
Pension
 Plans, 
net of Tax (2)
 
Ownership Share of
Equity Method 
Investees’ Other 
Comprehensive 
Income (Loss), net of Tax
 
Cash Flow Hedges, net of Tax
 
Excluded Component of Fair Value Hedges, net of Tax
 
Net Accumulated 
Other 
Comprehensive 
Income (Loss), net of Tax
Balance at March 31, 2018
$
9,715

 
$
879

 
$
(14,831
)
 
$
285

 
$
1,154

 
$

 
$
(2,798
)
Other comprehensive income (loss) before reclassifications
(24,203
)
 

 

 
(11
)
 
(3,795
)
 

 
(28,009
)
Amounts reclassified out of AOCI